suppose i have databases DB1 and DB2 on the same server. Now i connect to DB2 using db2connect. Now how can i query tables of DB1????.

You can either use a distributed transaction, for example via XA, or you use DB2's federated capabalities.

well can you give me an example using distributed transactions..........i mean like just a small piece of code.....or can u just redirect me to some place where it is available...i mean code....also i am writing a stored procedure which spans two databases on the same server....and i have to manipulate with the data present in these tables....

I believe that type 2 connections are extensively documented in the DB2 manuals. I don't know which additional information you may need for those. Also, we have no idea about your application and programming language.

If you are inside a stored procedure, your only option in federation. Federation already comes with the necessary infrastructure for distributed transactions, i.e. it performs two-phase commit itself and DB2 acts as a transaction manager in that case.